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Over the past four years there has been a sharp drop in the number of young people studying computing at school, with many dismissing it as a subject for nerds and anoraks.

The decline has alarmed employers, who are beginning to realise that unless something is done, they are going to have trouble recruiting staff for their IT departments.

Many employers believe that the answer could be a new diploma in business and IT, an alternative to traditional GCSE and A-levels. The hope is that the course will win back the hearts and minds of young ­people.

It is one of five specialised diplomas announced in the government's 2005 Education and Skills White Paper and will be rolled out in schools from 2008.

The diploma, the first schools qualification to be designed by employers, aims to make IT more exciting, said Karen Price, chairman of sector skills council E-Skills UK.

"A lot of young people are switched off IT as it is taught in schools. They tend to find the subject boring and then assume that working in IT must be boring. The relevance of the diploma and the way it is taught should make it much more exciting and really attractive for young people," she said.

The diploma has won backing from the UK's leading employers. More than 600 firms have had an input into the design of the course, and AstraZeneca, Ford, John Lewis, BT and Vodafone are among the organisations helping to design the curriculum.

The result should be a qualification that is much more focused on the needs of employers than the current computing qualifications. Its development marks a recognition that as an increasing number of basic IT jobs, such as programming and systems support, go offshore, IT professionals in the UK will need higher value business and management skills.

The diploma aims to develop young people's communication and teamworking skills, teach them project management and problem solving, and explain the workings of business as well as IT. There will be an emphasis on developing strong English and maths skills - a key requirement from employers who have reported a sharp decline in these basic skills in recent years.

The IT components of the course will focus on real-life business projects. Students will be taught how to write business cases for IT projects and to estimate the costs and return on investment of projects. They will be expected to manage projects during work placements.

The diploma will be offered at three levels to students between the ages of 16 and 19. Level 1 is equivalent to four or five GCSEs, level 2 to five or six GCSEs, and level 3 to three A-levels.

It aims to be flexible enough to prepare students who want to go straight into work after GCSEs or A-levels, or to act as a foundation for those who want to go on to study computing at university.

Those who want to go straight into work after leaving school can opt to study supplier qualifications, such as the MCSE (Micro­soft certified systems engineer) to prepare themselves for the workplace. Others will be offered the chance to study subjects in more depth, in so called "stretch modules" designed to reach a higher level of academic achievement.

Feedback from businesses shows that employers are particularly looking for rounded young people with a range of skills, not just specialists in IT. The diploma will allow for this by encouraging students to take an A-level in a science or a language as part of the qualification .

Andy Hill, head of resourcing at Vodafone UK, said the diploma would improve the quality of new recruits coming out of the school system. "People were coming out of schools who were quite technical, but what was missing was that they did not seem to interpret how technology makes a difference. Things like project management, communication and putting technology into a business context were missing," he said.

"For us to compete as an economy we should have people coming out as educated and as business savvy and business aware as possible."

Price acknowledged that a lot of hard work still remains to be done if the diploma is to prove a hit with students and their parents.

Employers will need to do their part by providing case studies, offering to provide speakers from the industry, helping with careers advice, and offering work experience. In some cases, employers could provide training days for teachers to help them get up to speed with the latest technology.

"I am very clear that it absolutely addresses what every single employer is saying to me they are looking for. At the top end, it is people who understand business as well as technology. I think it will make a step change," Price said.

Practical projects to boost skills

Tasks students will be asked to complete for the level 3 diploma in IT and business include:

Develop business case for an IT system, including business benefits, risk, and return on investment

Run a simulated small businesses

Analyse and document a business process and identify areas of improvement

Present written and spoken project proposals, and negotiate as part of a team

Use mathematical concepts to understand business dynamics and solve business problems

Understand key factors in the success or failure of projects and the principles of project planning

Develop a project plan for an IT project, including defining objectives, milestones, budget, risks and evaluation

Understand core techniques for managing the availability and security of technology systems.

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